Use the following information to work Problems 9-11. The Wildcat Oil Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its oil exploration business. Management has decided that it must use the system to stay competitive; it will provide $2.7 million in annual pretax cost savings. The system costs $9.4 million and will be depreciated straight-line to zero over five years. Wildcat's tax rate is 23 percent and the firm can borrow at 9 percent. Lambert Leasing Company has offered to lease the drilling equipment to Wildcat for payments of \$2.05 million per year. Lambert's policy is to require its lessees to make payments at the start of the year. . Lease or Buy What is the NAL for Wildcat? What is the maximum lease payment that would be acceptable to the company? 13. Setting the Lease Price An asset costs $780,000 and will be depreciated in a straight-line manner over its 3-year life. It will have no salvage value. The corporate tax rate is 22 percent and the appropriate interest rate is 7 percent. a. What set of lease payments will make the lessee and the lessor equally well off? b. Assume that the lessee pays no taxes and the lessor is in the 22 percent tax bracket. For what range of lease payments does the lease have a positive NPV for both parties